The Multinational Monitor



World Bank

by Pratap Chatterjee

SINGRAULI, INDIA -- Electricity arrived in Chilkanand, an Indian slum of 20,000 people, in September 1994, four years after an electric line was installed. A couple of months later, the power was cut off again and has not been restored. But the night sky over town is lit up by the lights of five giant electrical plants, run by the government-owned National Thermal Power Corporation (NTPC). The irony of being without electricity in the shadow of these huge power plants is all the greater for these slum dwellers because most of them were evicted from their homes -- sometimes repeatedly -- to make way for the power plants and the coal mines that supply them.

Let there be light

NTPC smokestacks dominate the skyline of this slum in Singrauli, a sprawling industrial area in central India's Madhya Pradesh and Uttar Pradesh states. Until 30 years ago, the area surrounding the villages of Singrauli was a dense forest inhabited by tigers and bears.

Power, both political and electrical, has transformed the landscape. The transformation came first by flood and then by fire. Initial changes came in the 1960s, when the Rihand electrical dam was built. In 1977, the World Bank lent $850 million to construct a major coal power plant, an open-pit mine and transmission lines. More than 150,000 people have been displaced in the last 30 years to make way for these projects.

"The government talks development ... [but] what are they doing about these people?" asks K.C. Sharma, a local activist, who has been resettled five times in the last three decades for development projects in this region. "There is no work for them because they have lost their agricultural lands and there are few jobs in the power plants. Worst of all, there is no place in India where the water and air is more polluted," Sharma says.

Light show

Chilkanand's short-lived connection to the power grid coincided with a visit to the area by World Bank officials. As part of a June 1993 $400 million loan package to expand the power plants by 2,000 megawatts (MW), Bank officials had stipulated that living conditions in Chilkanand and other resettlement sites be improved.

To better the lot of resettled people, a national resettlement workshop was called in November 1994, attracting government officials from New Delhi, the Indian capital, and staff members from World Bank headquarters in Washington, D.C. In anticipation of their arrival, NTPC officials persuaded state electricity authorities to turn on the power in Chilkanand. For a short while, electricity powered the town's street lights, even though no homes have ever been wired.

"They have a policy of keeping us in the dark. They just conduct these workshops in order to make a film to prove to the World Bank that local activists have been consulted," says Awadhesh Kumar of Srijan Lokhit Samiti. Srijan Lokhit Samiti is an organization of social workers who take up complaints from local people on environmental and social matters involving the government, plant management and funders such as the Bank.

Tower of Babel

At the resettlement workshop, Kumar and Sharma submitted testimony about the effects of Bank-sponsored projects on people such as Shubh Narain Dubey of Harrai village. Dubey was moved from his village in 1983 for the construction of another local power plant project, the Vindhyachal Super Thermal Project (VSTP). Eleven years later, the land he lost has not been used and, like six out of every seven household heads in the region, he has not found a job.

Last year, NTPC officials finally issued their company policy on the rights and privileges of displaced people in the local language, Hindi. But Kumar says many displacement evaluations and plans are only available in English.

Two displacement studies -- one by Electricité de France, the French state utility company, and another by the British firm GHK/MRM International -- cost $5.5 million. "All that money went to foreign consultants," says Sharma. "Not one job was generated by the studies that were supposed to evaluate the condition of the oustees. And now we can't even read what they said about what should be done for us," he complains. "We can't translate all the documents into Hindi," says VSTP Manager B.L. Narula. "They run to dozens of volumes and local people will not understand the details anyway."

Shortly after the World Bank approved initial funding for the power plants, the Indian government returned to Washington with a new loan application. The government requested $425 million for Calcutta-based Coal India Limited to expand 33 coal mines that supply power plants in Singrauli and elsewhere in India. This loan application was postponed in June 1995 after a poor showing by the ruling Congress Party in state elections raised questions about whether Prime Minister P.V. Narasimha Rao can lead the party to another national victory. "The Indian government wants us to wait until the political situation in the country becomes more stable," says an official in the India department of the Bank's Washington, D.C. headquarters.


Meanwhile, the living conditions of those evicted to make way for the coal mines are little different from those who were evicted for the power plants. Take the newly established village of Ambedkarnagar a few kilometers from Chilkanand. The road leading to Ambedkarnagar has a row of five concrete pillars connected to each other by electric wire. But the power line is not connected to homes, street or lights in the community. The road and the pillars are the only evidence of development work done by Northern Coal Limited (NCL), a subsidiary of Coal India Limited, which transplanted Ambedkarnagar's 300 inhabitants here last year.

NCL has turned their former homes in the town of Khadia gaon into a dump for a neighboring coal mine. The mine authorities have not provided the 58 households in Ambedkarnagar with schools, potable water, electricity or sanitation facilities. Pointing to a well that her family dug for itself, Javetri Devi, a local woman, says, "Without this we would have no water." The villagers also have built their own homes, but two houses have collapsed, rattled by area mine blasting. Only 20 people in the settlement work at the mine. The other 280 people lack work or decent farm land.

Many more Indians will be affected if the Coal India loan application comes through. Twenty of the 33 mine expansions would require the resettlement of 18,257 people, according to Bank documents.

The loan request includes funding to cushion the impact of coal mining on neighboring communities and the en-vironment. None of this will go to Ambedkarnagar, according to Bank officials in Washington, D.C., because the Khadia mine is not being expanded. "The only mine that will be expanded in Singrauli under the new loan is Jingurdah. The other mines having nothing to do with us. I understand that people have difficult living conditions and my heart goes out to them," says a Bank official in Washington. "It is our job to assist Coal India to make resettlement, which is never a desirable matter, as painless as possible. But I have yet to see somebody who was resettled who was completely satisfied," adds the official.

"We told the people who are now at Ambedkarnagar to go to Jawaharnagar, a different site with more facilities like drains, [and] a dispensary, but it was further away, and the people refused to go," says M.R. Aggarwal, NCL's planning officer, who was general manager for the Khadia coal mine at the time that the people were displaced. Aggarwal says that there is little more that the company can do. "The question of electricity is not our problem. We have provided the poles; it is up to the electricity board to give them the connections. We will provide jobs for them, provided there are vacancies, but right now, there are none," he adds.

Near the mine, Khadia gaon itself has almost vanished under a 100-foot mountain of coal and debris. A few forlorn houses are still perched on higher ground that has yet to be used, awaiting final demolition orders. One of them belongs to Ganesh Sahu, who says that 16 people live in his house, which stands on six acres of farm land. ''We will have to leave soon, I think. Everyday somebody comes to threaten us. Already the mine has taken 16 acres of our land,'' he says.

The NTPC and NCL take land to build power plants, coal mines and reservoirs, which are used to contain fly ash generated by burning the coal. The older reservoirs have poor filters that discharge contaminated water into the Rihand reservoir, which supplies the local drinking water. Superior filters on the newer reservoirs cause the basins to fill up with fly ash quickly. Other fly ash does not reach the reservoirs because it leaks from the faulty pipes that carry contaminated water from the power plants. Leaked water seeps into the ground and into local canals.

This summer the village of Mithini is expecting to lose all its agricultural lands to a fly ash containment dike. Mithini villagers are all oustees from other parts of Singrauli who say that they have received meager compensation for lost lands and livelihood. One Mithini villager says that he was paid $16 in compensation for a mango tree that yielded an annual income of $96. The villagers have sought a court order to stop the dike construction.

Land, jobs and pollution are not the only problems with Singrauli's power projects, says Karan Capoor, an analyst with the Washington, D.C.-based Environmental Defense Fund. "Our calculations show that the NTPC expansion over the next few years will contribute 2.5 percent of the increase in global warming for the entire planet," he says. Capoor says that conservation alternatives would be cheaper, less disruptive and less polluting.

The potential Bank loans to expand 33 coal mines across India are part of a larger plan to eventually add 16,000 MW to the power grid through new power plants. Indian planners say the country needs 150,000 MW of electricity generating capacity over the next 15 years -- in addition to the 80,000 MW in existence today.

Yet even the Bank's own experts see problems with this approach. A paper written by Bank analysts in 1991, "Long Term Issues in the Indian Power Sector," says more emphasis needs to be placed on improving the efficiency of energy supply, consumption and pricing. Just expanding the country's power supply capacity will not substantially improve India's energy problems, says the report, which predicts that India's current approach to the megawatt race is likely to be financially unstable.

Sustaining Unsustainable Development

WORLD BANK ENERGY PROJECTS IN INDIA, with few exceptions, have neglected alternative energy sources and the wider issues of poverty, self-reliance and debt dependency. The Bank has even undermined Indian government efforts to promote alternative energy and to electrify poor rural areas.

As the largest source of foreign financing for Indian energy, the Bank has exercised enormous influence over India's energy industry. Yet, almost all of the $9.5 billion in World Bank energy loans to India have financed environmentally and socially destructive projects.

One such coal-fired project in the central India Singrauli region may soon be one of the largest sources of greenhouse gases on earth. "In a single decade, from the late 1970s to the late 1980s, the World Bank financed the construction of 12 gigantic coal-fired power plants all over India, of which Singrauli was only one," explains Bruce Rich, of the Environmental Defense Fund.

"The Bank had completely ignored the issue of resettlement" for three-quarters of these projects, according to Rich. Estimates of those forcibly displaced by these projects range from 75,000 to 200,000 people; nobody knows the exact number.

Nor has the Bank learned from errors it committed in India in the 1980s. It has just begun disbursing $400 million of the $1.2 billion loan it has pledged to India to build 15 new coal-fired and two new gas-fired plants over the next decade. The Bank has begun these disbursements without completing resettlement plans or environmental or social impact assessments for the new plants.

Coal mines and coal-fired power plants, like those in Singrauli, have received the most Bank funding. India relies on coal for 70 percent of its commercial power and this fuel has wreaked havoc on India's environment and people. Indian coal is particularly damaging to human health because of its high ash content. Indian thermal power plants emit 50 million tons of this highly polluting ash each year, along with thousands of pounds of mercury and huge amounts of sulfur dioxide. Sulfur dioxide levels are dangerously high in nine of India's 10 largest cities.

Massive, on-going World Bank funding for such environmentally destructive and unsustainable energy projects is at odds with the Bank's own rhetoric. "The World Bank, as the largest multilateral source of development finance for developing countries, has a special responsibility to ensure that the programs and projects it supports are consistent with the objective of sustainable development," claims the 1994 World Bank Annual Report.

While the Bank has a few small sustainable development projects and a few staff members who are trying to turn the tide, the vast majority of Bank projects continue to be extremely destructive to the environment. Ellen Schmidt of Greenpeace estimates that only 1.4 percent of Bank energy loans finance renewable energy projects. "Almost all Bank financing for the Indian energy sector went to fostering carbon dioxide emissions," she says.

Despite well-documented, feasible alternatives, Bank staff continue to promote unsustainable energy resources. William Nickel, the country officer for the World Bank's India department explains that the Bank neglects alternative energy because "this is not something we do well." Alternative energy projects tend to be relatively small scale and decentralized, Nickel says, and the Bank "does not have a lot of success with small-scale projects." He argues that the Bank should stick to what it does best: large, centralized, capital-intensive energy projects based on conventional energy sources and neoliberal economic policies.

Asked about the environmentally destructive impact of these projects, Nickel replies, "We cannot be all things to all countries."

Only one World Bank project in India is designed to promote alternative energy -- the first such Bank project anywhere. Begun in 1992, this three-part project has had mixed success. It was designed to promote investment in India's solar, wind and micro-hydro power sectors. These forms of alternative energy are particularly well suited to India and have been more successful here than in most other countries, largely because of government incentives. The Bank teamed up with the Global Environment Facility (GEF), national aid agencies, the Indian government, and private investors to lend almost $200 million to investors to develop these technologies in India between 1993 and 1998. The World Bank group supplied more than half of this funding.

The solar program has been least successful. After two years, available loans for solar photovoltaic electricity had failed to attract a single investor. Yet, some of the world's largest producers of solar technologies are based in India, where the solar market has expanded 30 percent each year over the past decade. India is a natural solar location because it has approximately 300 sunny days a year. Solar technology is most appropriate in remote sunny areas, such as Indian villages, which are expensive to harness into the electrical grid.

In the January 15, 1995 issue of Down to Earth, the magazine published by the New Delhi-based Center for Science and Environment, journalists Anumita Roychowdhury and Koshy Cherail argue that "investors have kept away" from this Bank-funded program "because of the stringent terms, high interest rates and the almost sadistically complex procedures involved in international bidding."

The international bidding process is designed to ensure that funding goes to companies with the lowest bids, not those with the most appropriate social and environmental proposals. "The World Bank [bidding] process really does not look at externalities," the indirect benefits of certain kinds of expenditures, according to Lara Helfer of the Washington, D.C.-based International Institute for Energy Conservation. "So the least-cost issue is in effect false." In fact, the process tends to favor large corporations from industrialized countries that fund the Bank. Large corporations have the resources to craft successful bids that beat local competitors, thereby undermining opportunities to develop local industries.

Gandhian self-reliance is antithetical to the Bank's neo-liberal economic philosophy. "The international competitive bidding process does not favor the countries receiving the loans, so the money does not make its way into those economies," explains Helfer. Although the Bank's 1994 annual report says the Bank's "fundamental objective is to support the reduction of poverty in member countries," its bidding procedures seem more conducive to multinational corporate profits. "We have been witnessing the transfer of public funds from the wealthy industrialized nations to developing countries, so that they can be sent right back -- with interest -- as profits for oil, coal and nuclear industries and interest to multilateral banks beholden to" rich countries, says Greenpeace energy expert John Willis.

The Indian government had established one of the best incentive programs for alternative energy in the developing world. Investors were lured into alternative energy by programs offering 100 percent depreciation and a five-year tax holiday on alternative energy investments. Although these incentives appear to complement the Bank's purported sustainable development goals, Bank officials treated these programs as an unwanted source of competition with Bank energy programs, going so far as to pressure the Indian government to eliminate its subsidies for alternative energy. "Unable to lure investors, the World Bank is turning the screws on the Indian government to reduce subsidies for its own programs and shift the focus from rural to urban markets to ensure better returns," Roychowdhury and Cherail wrote.

World Bank and GEF officials declined to respond to repeated Multinational Monitor requests for comment on these issues.

Bank officials pressured the Indian government to shift its priorities from rural energy projects to urban areas. Of India's poor majority, 80 percent live in rural areas and 70 percent do not have electricity, an inequity that was reflected in a government rural electrification campaign. The Bank opposed this focus for its funds because its officials complained that rural areas in India offer excessive financial risks and inadequate profit margins.

Bank officials reportedly threatened to pull their alternative energy program out of India if the government failed to shift its emphasis from rural to urban India. The Bank displayed its willingness to cancel funding last year, when it withheld $750 million in Indian energy loans because the government did not conform fast enough with Bank demands. Bowing to pressure in early 1995, the Indian government scaled back alternative energy subsidies and power projects in India's poorest states.

-- Corinne Drumheller

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